knowledge 19 April 2021 |

Update on Implementation of Audio-Visual Media Services Directive in Ireland

The first draft of the General Scheme was published in January 2020 (for background, read our briefing here).  At that time, Parts 4 and 5 of the General Scheme, titled “On-demand Audio-Visual Services” and “Miscellaneous AVMSD Provisions” had been left blank. These provisions have now been added to the General Scheme. In addition, in July 2020 the European Commission issued guidance on key aspects of the Revised AVMS Directive, such as when social media services will fall within the regulatory regime.

The Revised AVMS Directive overhauls the existing AVMS Directive² to account for the “ongoing convergence” of television and internet services. Ireland’s approach to implementation is significant because, as noted by Minister Catherine Martin, Ireland “will have a role in regulating certain companies with European Headquarters established in Ireland on a pan-EU basis. This includes a number of major global companies such as Apple, YouTube and Facebook.”

How will the Revised AVMS Directive be implemented in Ireland?

The finalised General Scheme and the European Commission’s guidance provide further detail on the following key aspects of the new regime:

Media Commission replaces Broadcasting Authority of Ireland (“BAI”):

Under the General Scheme, the BAI would be dissolved and replaced by a multi-person Media Commission, tasked with regulating the audio-visual sector. The Media Commission will include an Online Safety Commissioner, with specific responsibility for regulating content on social media platforms. The Media Commission will have the following powers, inter alia:

• Media Codes: preparing and revising on an ongoing basis ‘media codes’ governing standards and practice to be observed by media service providers (i.e., linear broadcasters and video on-demand services (“ODS”) such as RTÉ Player and Netflix).

• Enforcement: Investigating and enforcing breaches of the Bill or codes/rules issued under the Bill, including the power to prosecute summary offences and impose administrative fines.

• Industry Levy: Imposing a levy on regulated providers.

Regulation of Video-Sharing Platform Services

The Revised AVMS Directive extends the EU regulatory regime to video-sharing platform services (“VSPS”) (for example, YouTube and Vimeo) that allow users to generate and share videos over which the platform provider does not have editorial responsibility. VSPS will be required to protect minors from harmful content and all users from content that incites hatred or violence. In addition, VSPS will have obligations regarding audiovisual commercial communications, for example, to inform users where videos contain such communications (e.g., hidden advertising or product placement).

The Directive provides that social media services may fall within the definition of ‘VSPS’ where the provision of programmes and user-generated videos constitutes an ‘essential functionality’ of the service provided. In July 2020, the European Commission published guidelines³ setting out factors for national authorities to consider when applying the ‘essential functionality’ criterion, including:

• The relationship between the audiovisual content and the main activity of the service (e.g., is the video-sharing element a ‘standalone’ feature or does it merely facilitate economic transactions?);

• The quantitative and qualitative relevance of audiovisual content for the activities of the service (e.g., are there a significant number of videos with a large reach?)

• Monetisation or revenue generation from the audiovisual content (e.g., do customers pay for access? Do videos have advertisements?)

• Availability of tools enhancing visibility or attractiveness of content (e.g., are the videos promoted on the website? Are tools such as filters, sharing options and live chats specifically linked to the videos?)

Under the General Scheme, the Media Commission will have the power to designate VSPS as “relevant online services”, having regard to the European Commission’s guidelines. The consequence of a designation is that a service will be required to comply with ‘online safety codes’ issued by the Media Commission (dealing with issues such as content moderation, reporting obligations and complaints procedures) and will be subject to the Media Commission’s enforcement powers and a new ‘super-complaints’ scheme for systemic issues. The Media Commission will be obliged to maintain a publically available and up to date list of designated online services and categories thereof and the online safety codes that apply to the services. Failure to comply with online safety codes following a warning notice from the Media Commission will be an offence under the Bill.  

Registration of On-Demand Services

The Bill imposes a requirement for ODS established in the State to register with the Media Commission. Failure to register may result in summary prosecution by the Media Commission. However, the explanatory note acknowledges that the intention is to focus on large services, not “individuals or entities that are operating innocuous, small scale” ODS, of which there are “potentially thousands established in Ireland”. The Media Commission will publish guidelines on the registration process after the commencement of the Bill. The obligation to register does not apply to providers who do not have editorial responsibility for the choice of the audiovisual content – such as VSPS.

Administrative Fines

Where regulated entities breach their obligations under the Bill, the Media Commission may impose administrative financial sanctions of up to €20 million or 10% of relevant turnover in the preceding financial year, whichever is higher. Undertakings that have been fined will have 28 days to appeal to the Circuit Court, or, where the fine exceeds €75,000, the High Court. Where no appeal is brought, the Media Commission must apply to the Circuit Court for ‘confirmation’ of the fine. The Circuit Court must confirm the decision, unless it “sees good reason not to do so.” Undertakings may consent to the imposition of administrative sanctions without the confirmation of the Circuit Court. Following an investigation, the Media Commission may also avail of other sanctions, such as removal from the register and (with the leave of the High Court) orders to comply and orders compelling ISPs to block access to an audio-visual media service.

Calculation of “European Works” requirement

Member States are required to ensure that ODS “secure at least a 30% share of European works in their catalogues and ensure prominence of those works.”⁴ This obligation does not, however, apply to ODS with low turnover or a low audience. The European Commission issued guidance⁵ in July 2020 on how the 30% share should be calculated, and on how the terms ‘low audience’ and ‘low turnover’ should be interpreted.

• Calculation of Share: In the case of linear services⁶ (such as television broadcasting), the share will simply be calculated by reference to transmission time. For ODS, the share of European works should be based on ‘titles’ (e.g., films or series) in the provider’s catalogue. The Commission explained that this method would be less burdensome for ODS than calculating the overall duration of their catalogue, and would more easily facilitate monitoring and supervision by national authorities. Where an ODS has multiple national catalogues with differing compositions, the guidance advises that the 30% share should be secured in each of the national catalogues offered.

• Exemptions:
  1. ‘Low turnover’: The guidance states that micro enterprises (i.e., enterprises with annual turnover of less than €2 million) should a priori be excluded from the European works obligation, unless it would be proportionate to include them (for example in small Member States where even microenterprises may have a significant market presence);
      
  2. ‘Low audience’: For linear services, the term low audience should be understood by reference to the established concept of daily audience share for the reference year. Noting that linear services are dominated by domestic providers, the guidance advises that cross-border channels with an audience share below 2% in a targeted Member State should be considered to have a low audience. For ODS, the guidance recommends determining audience numbers by reference to the number of users/viewers of a particular service, for example, the number of paying subscribers for a subscription service such as Netflix. The guidance states that providers of ODS with an audience share of less than 1% within a given Member State should be deemed to have a low audience. A provider’s share should be determined by reference to “the total number of users of (similar) VOD services available on the national market.”
     
     The General Scheme provides that the Media Commission shall issue rules on the low turnover and low audience exemptions, which rules shall have regard to the European Commission’s guidelines. The Media Commission will also produce rules on the obligation on ODS to ensure ‘prominence’ of European works – a matter that is not dealt with in the European Commission’s guidelines.

Industry Levy

Under the existing regime, Member States may require media service providers to make financial contributions to the production of European works. Article 13 of the Revised AVMS Directive provides that Member States may additionally require financial contribution from providers who are not under their jurisdiction but who “target audiences in their territory.”⁷ Where Member States require financial contribution from providers under their jurisdiction, they must take into account any financial contribution obligation imposed on that provider by ‘targeted Member States’.

Under the General Scheme, the Media Commission will be empowered to make regulations prescribing a levy to be paid by audio-visual media service providers. The levy will be used to fund the Media Commission and to establish grant schemes to support audio-visual programmes on Irish culture, heritage and experience. The levy will apply “solely to revenues earned within the State”. The amount of the levy and the activities to which it will apply will be determined by regulations. The levy will not be applied until a review of its viability has been conducted by the Media Commission. The industry levy will not apply to VSPS or to providers with a low audience or low turnover.

What Happens Now?

The finalised General Scheme has been forwarded to the Office of the Attorney General for detailed drafting and to the relevant Joint Oireachtas Committee for pre-legislative scrutiny. The deadline for transposition of the Revised AVMS Directive was 19 September 2020, and the European Commission launched infringement proceedings against Ireland and 22 other Member States in November 2020 for failure to transpose the Directive on time.⁸

As noted above, the jurisdictional rules in the Revised AVMS Directive will mean that the Media Commission will have the task of regulating large operators with European headquarters in Ireland. For this reason, there will be considerable focus on the progress of the legislation and, once it is enacted, on the regulations, rules, media codes and online safety codes to be issued by the Media Commission, which will determine the regulatory status and obligations of these providers.

Also contributed by Ciarán Donohue.